This preview shows page 1. Sign up to view the full content.
Unformatted text preview: Expenditure Multiplier = a + mpc × Y + I
1 − mpc
1 − mpc ISLM Model = 1
1−mpc > 1, again expenditure multiplier According to Keynes, changes in autonomous spending (a or I , but
mostly I ) are dominated by “animal spirits”. Total autonomous spending is A = a + I ∆Y
∆a A change in autonomous consumption spending a leads to an
even larger change in aggregate output. ⇔Y Y Changes in Autonomous Spending Aggregate Output ...
View Full Document
This note was uploaded on 02/14/2012 for the course ECON 3310 taught by Professor Dix during the Fall '08 term at York University.
- Fall '08